"Discipline and Traders" Introduction to Market Psychology Chapter 3: The Market Is Always Right — Only those who abandon "being right" seize profits —
? Mark Douglas's The Disciplines of Trading: A Complete Illustrated Series, the long-awaited start of Chapter 3: The Market Is Always Right! ?
In Chapter 2, we learned about the “brainwashing of labor and control,” the idea that bringing the rules of society into the market as-is can lead to failure.
Now entering Part 2, the theme of Chapter 3 we will explain is a鉄則 that traders must absolutely avoid missing… the absolute truth of the market: “The market is always right”! ??
Why do we suffer huge losses by going against the market? How can we ride the waves of the market with ease? We will thoroughly dissect the core!
This series will be uploaded sequentially through a total of 14 chapters, next up isChapter 4, Chapter 5… an practical curriculum that will nurture your trading mindset to pro levelas we continue. Be sure to bookmark and together acquire a lifelong “winner’s discipline”! ?✨
⚖️ 1. What determines the “current price” in the first place?
The current price shown on the chart (the current value). What does this really mean?
Mark Douglas states clearly that “the current price represents the consensus of all traders participating in the market at that moment.”
The buyers believe, “Prices will rise further in the future (it’s cheaper to buy now),” while the sellers believe, “Prices will fall further in the future (it’s higher to sell now).” These two sides clash, and the price at the moment a trade is executed is the “current price.”
In other words, what creates price movements is not the company’s performance or the accuracy of news itself.Only the strong belief (force) of traders who wish to make a profit moves the market.
?? 2. Education, prestige, IQ… in the market, they are “worthless”
In general society, being highly educated, holding positions at famous companies, and having a high IQ are valuable.
However, listen to this shocking fact: the author asserts that in the world of the market, educational background, degrees, honors, and high IQ have no value or meaning whatsoever!
Because no matter how smart you are or how logical your reasons (such as fundamental analysis) are for thinking “this stock should go up,”the market’s majority force (capital and belief) can move in the opposite direction, and prices will move against you without mercy.
In the market, your personal “correct reasons” or wishes do not have any power to move prices. Unless you have the funds to support the market, “the market movement is always right.”
?? 3. The trap of the belief that “it shouldn’t get this cheap”
There is a phrase that traders who cannot follow the trend and suffer big losses always utter: “There’s no way it can get cheaper than this (or higher than this).”
For example, if the market crashes and makes a new low, failing traders think, “It’s cheap now, a buying opportunity!” and try to counter-trend.
But think about it. The fact that a new low has been created is clear evidence thatthe majority of traders (selling force) still want to sell at that low.
Clinging to your internal notion of a “fair price” and going against the market is like standing in front of a moving train and trying to stop it with your hand.
?? 4. The ultimate binary choice you must make: “I am right” or “I make a profit”
This is the most important and most piercing core in Chapter 3❤️? !
To survive as an individual trader, we must choose one of the following “ultimate binary choices.”
Continue to insist that I am right while other traders (the market) are wrong
Discard myself and adapt to the market’s behavior to “make a profit”
Mark Douglas says:“The situation where ‘only I am right and everyone else is wrong’ cannot exist. These two (being right and making a profit) rarely coincide, and it is difficult to reconcile them.”。
Many people started trading to make money, but unconsciously they replace their goal with confirming their own analysis or forecasts (ego satisfaction). As a result, they fail to admit their mistakes, delays in cutting losses, and suffer fatal damage.
There is only one rule to become a winner.“Discard the ego of wanting to prove you are right, and humbly accept that the market is always right, and quietly ride its waves.”.
? Summary: Today’s lesson and next installment
A recap of Chapter 3! Here are the three rules you should engrave in your brain from today onward?✅
① The current price is the consensus of all market participants.
② Individual education and logic do not matter. The absolute truth is the market’s trend, powered by capital.
③ Discard the ego that wants to prove you are right and focus on making a profit!
? [Next preview: On to Chapter 4 and 5—the journey of transforming your mindset continues!]
“It’s clear that the market is always right. But why do emotions run wild and cause us to break the rules when facing a chart?”If so, you’ve thought about it, don’t worry!” Starting with Chapter 4, we will delve into the human instinct mechanism and the loop of price fluctuations—our brains’ defense reactions to losses and fear.
In Chapter 5, practical approaches to free yourself from the fear’s grip will be revealed. This series will continue to elevate your trading from “gambling” to “a consistent business”! Don’t miss the next update!
? [Today’s reflection prompt (tell us in the comments!)]
Thank you for reading to the end! To reinforce today’s lesson, please reflect on just one thing.
?“Have you ever had an episode in past trades where you stubbornly believed your analysis was right and could not cut losses, ending up with a big loss? At that time, what excuses did you tell yourself in your mind?”
Please try commenting or noting it. Objectively observing your past ego is the fastest path to becoming a winner trader! ✨